The Canadian government has announced significant changes to mortgage rules, with the changes scheduled to take effect in coming weeks. Here's what these updates mean and how they could affect you:

KEY CHANGES

1. Higher Insured Mortgage Cap

Previously, to qualify for mortgage insurance with less than a 20% down payment, your home needed to cost under $1 million. Now, the government is raising this limit to $1.5 million, effective December 2024. This reflects rising home prices in cities like Toronto and Vancouver, helping more buyers qualify for insured mortgages with lower down payments.

2. 30-Year Amortization for First-Time Buyers and New Builds

First-time homebuyers and those purchasing newly built homes will now have the option of a 30-year amortization instead of the standard 25 years. This change is intended to reduce monthly payments and ease the burden on new buyers entering the market.

3. Expanded Opportunities to Switch Lenders

The Office of the Superintendent of Financial Institutions (OSFI) is eliminating the stress test for uninsured mortgage switches. If you've put down 20% or more, no more proving you can afford your mortgage at higher rates when switching lenders at renewal—making it easier to explore new options and secure better deals.

WHAT DO THESE CHANGES MEAN FOR YOU?

• More Affordable Down Payments
  With the increased cap, more buyers can enter the market with a smaller down payment. Under the new rules, a $1.5 million home could require as little as $125,000 down, compared to the previous requirement of $300,000.

  But with the new insured mortgage limits, the sliding scale for down payments could change. So far, we haven’t seen details on whether this will stay the same or be updated, but it’s something to keep an eye on.

• Lower Monthly Payments
  The extended 30-year amortization period will lower monthly mortgage payments, although it may result in paying more interest over time.

• Increased Competition Among Lenders
  With easier lender switches at renewal, homeowners will be able to negotiate better interest rates. Previously, the stress test created an advantage for existing lenders, often preventing borrowers from accessing the lower rates available on the market.

NAVIGATING MORTGAGE CHANGES:
HERE TO HELP!

In today’s evolving market, staying informed and making well-considered decisions is key. Whether you’re a first-time buyer, refinancing, or simply exploring options, I’m here to guide you with expertise and insight.

With trusted contacts at all major banks, I can connect you to the right lenders and solutions tailored to your needs. Let’s work together to ensure your mortgage strategy supports your financial goals and provides peace of mind.

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